Commune Hotels & Resorts and Destination Hotels Set to Merge

Consolidation fever in the hospitality industry is trickling down in the boutique hotel space.

— Andrew Sheivachman

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Commune Hotels & Resorts and Destination Hotels announced plans for a merger Friday afternoon, forming a combined company managing more than 90 hotels in seven countries.

The new company will be based in Denver, Colo., while retaining offices around the U.S. and Asia. Together, the company will manage more than two billion in property revenue. The merger will combine the two companies’ hotel brands and hotel management operations.

Destination Hotels is owned by Lowe Enterprises, and co-CEO Robert Lowe, Jr. will be chairman of the new company alongside current Commune chairman John Priztker.

“This is an exciting step forward for all of us as we bring together these two great and complementary hospitality companies,” said Lowe in a statement. “Joining forces with Commune will allow us to position the combined company as the most sought after operator in this exciting segment of the industry and enhances our ability to deliver differentiated experiences to travelers across the globe.”

Commune Hotels, which is comprised of Joie de Vivre Hotels, Thompson Hotels, tommie and Alila Hotels & Resorts, is known for running boutique hotels in urban markets.

The merger dilutes Commune’s brand to a certain degree because the hospitality group has been at the forward edge of the design hotel explosion over the last decade. The Destination Hotels portfolio, meanwhile, has a more suburban and conservative following. While many of those resorts are upscale and lifestyle-oriented, to a degree, many of them lack the more globally-attuned cachet embedded in Commune’s DNA.

The Scottsdale Resort in Arizona or La Cantera Hill Country in Texas (a former Westin property) in the Destination Hotels collection, for example, are somewhat disconsonant with most of Commune’s inventory. Other Destination properties such as Eden Roc in Miami blend in better. However, the benefits for Commune in bringing on a more traditional, family-friendly portfolio into the fold to attract a new audience outweighs the slight brand discord.